Do you have a student debt? Are you currently overseas or planning to travel? The Australian Government has recently made some changes to repayment rules, so here’s what you need to know to avoid falling foul of the law.
If you have a Higher Education Loan Program (HELP) or Trade Support Loan (TSL) the Government considers your local and overseas earnings when determining your repayments. From July 1st 2017, you must update your contact details and submit an overseas travel notification if you are planning to spend 183 days or more overseas in any 12 month period. You also need to lodge your worldwide income or non-lodgement advice by 31 October 2017.
Overseas Travel Notification
To submit your overseas travel notification, you’ll need your passport and information including the country you’re planning to live in overseas and your expected departure and return dates. You can do this by visiting www.ato.gov.au and browsing to “Tax > Loan accounts > Overseas travel notification” in the menu options.
Reporting your worldwide income
Your worldwide income is your Australian repayment income combined with your non-resident foreign sourced income (income you earned overseas while being a non-resident). As you can see, you need to work out your residency status for tax purposes, before you proceed.
- Are you are a non-resident for tax purposes?
If your worldwide income for the 2016-17 financial year is at or below $13,717 dollars, you need to submit a non-lodgement advice form. If your worldwide income exceeds the threshold, you will need to report it. You can do either through ATO online services or a registered tax agent.
- Are you are a resident for tax purposes?
If you’ve earned worldwide income, check first about whether you need to lodge a tax return (most people do). If you do not need to lodge a return, you may need to lodge a non-lodgement advice form and we can advise you on this.
Documents you’ll need
To declare your worldwide income, you’ll likely need some or all of these documents:
- tax assessment or summary from a foreign tax authority (for example, issued from HMRC, IRS, National Tax Agency)
- payment summaries or payment slips from employers
- bank statements
- notices showing amount of government benefits received
- dividend and interest certificates
- rental income statements
- receipts to claim deductions for expenses incurred in earning non-resident foreign sourced income. eg. work-related expenses you incurred while performing your job as an employee.
Income assessment methods
There are 3 main assessment methods used by the ATO.
- Simple self-assessed method
This method is based on your gross non-resident foreign income and your occupation. A standard deduction will be applied based on that occupation.
- Overseas assessed method
In this approach, you enter the foreign income amount you were assessed as earning by the relevant foreign tax authority.
- Comprehensive tax-based assessment method
This method allows you to declare your foreign income and claim specific deductions, similarly to how you would in Australia.
There are unique pitfalls and advantages to each of each of the above approaches. To discuss which one is right for you and any other matter relating to your student debt obligations, contact us today.